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HomeMy WebLinkAboutMinutes - April 22, 2019 - CCCITY OF AZUSA MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL MONDAY, APRIL 22, 2019 – 6:30 P.M. The City Council of the City of Azusa, met in Special Session at the above date and time in the Azusa Light & Water Conference Room, located at 729 N. Azusa Avenue, Azusa, CA 91702. Mayor Rocha called the meeting to order at 7:00 P.M. ROLL CALL: Roll call was taken by City Clerk Cornejo. PRESENT: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA ABSENT: COUNCILMEMBERS: ALVAREZ ALSO PRESENT Elected Officials: City Clerk Cornejo. Staff Members: City Manager Gonzalez, City Attorney Priest, Director of Finance Johnson, Director of Economic and Community Development Marquez, Director of Public Works/City Engineer Bobadilla, Director of Information Technology and Library Services Graf, Director of Utilities Robledo, Director of Recreation and Family Services Carpenter, Chief of Police Hunt, Senior Planner Munoz, Assistant Director of Finance Honis, Budget Administrator Lam, Assistant Director – Water Operations Macias, Utility Programs Specialist Reid, and Chief Deputy City Clerk Garcia. PUBLIC COMMENT Mr. Jorge V. Rosales discussed item C-1 stating that the proposed sales tax increase would generate enough revenue to cover budget shortfalls; and recommended postponing the Utility User’s Tax increase. Mr. Bruce Monroe stated his opposition of the proposed sales tax increase and the proposed Utility User’s Tax increase; and suggested a cut in expenses instead. SCHEDULED ITEMS FOLLOW-UP TO FISCAL SUSTAINABILITY ASSESSMENT City Manager Gonzalez provided an overview of the Fiscal Sustainability Assessment and stated that Finance Director Johnson would be providing information regarding projected budget shortfalls, expenditures per department, and extraordinary revenue measures. Mayor Rocha stated that rising pension costs are the main reason for the budget deficit; and many cities are in the same position. City Manager Gonzalez further stated that the item would be presented at a Regular Meeting in order to allow for public input. Director of Finance Johnson presented the Staff Report stating that the Staff is seeking direction to potentially move forward with the two extraordinary revenue enhancements explored, which were a Sales Tax Override and Utility Users Tax Modernization; the General Fund 5-year financial forecast projected deficits range from $1.5M to $3.3M annually over the next five years due to increased PERS costs; an overview of expenditures by department was provided with a projected $44.6M budget in FY 2019/20, of which, personnel costs are 72% of the General Fund Budget; cash reserves are projected to be depleted to $1.6 Million by FY 2023/24 should the City decide not to cut costs or enhance revenues; credit ratings are largely based on adequate reserves on hand; projections do not include replenishment of designated reserves used; if nothing is done, the General Fund will not be able to sustain operations beyond FY 2023/24. A Fiscal Sustainability Assessment identified three contracts/franchise agreements to potentially renegotiate: increasing the transfer of Water Rights Leases from the Water Fund to the General Fund, which is not advisable at this time because of the risk of the Water Fund not meeting its debt service coverage; Staff is in discussion with Waste Management regarding the expanding of operations, however, it will take time and additional actions from the Council to realize any increased revenues; and the Hazardous Waste Ordinance that is in place, allows for the City to increase a percentage, however, Staff will need to discuss with the Hazardous Waste Company and return to the Council for approval. Director of Finance Johnson stated that revenue enhancement goals are to maintain a balanced budget, maintain designated reserves, tackle long-term liabilities, maintain and continue to improve credit standing, meet future financial obligations, maintain essential services to the community, and long-term sustainability. The projected budget deficits over the next 5 years do not include replenishment of designated reserves needed for: capital improvements, tackling long-term liabilities, closing out costly insurance cases, and catastrophic events, and long-term employment liabilities totaling $113.4M and expected to grow for the next 12 years. Director of Finance Johnson provided information regarding the two extraordinary revenue enhancement measures: 1) Sales Tax Override – The City is currently receiving a 1.0% allocation of the current 9.5% sales tax and there is a potential to increase the sales tax rate to 10.25%, it is anticipated that the additional 0.75% tax would be directly allocated to the City and could yield $3M-$4.5M annually; and 2) Utility Users Tax (UUT) Modernization – The UUT Ordinance was last updated in 2003 and does not assess the tax on telephone, cable, video, or garbage services. An overview of upcoming important dates was provided. City Manager Gonzalez stated that the Council also has the option to postpone the decision and spend down the reserves, which would bring the reserves down to $1.6M in the next 4 years and does not include replenishment of the reserves; or cut services which would ultimately cut personnel. In response to questions posed by the Council, City Manager Gonzalez explained that the sales tax increase must be approved by a simple majority of the residents and would result in a new sales tax of 10.25%, of which 9.5% would be remitted to the County and the remaining .75% would remain in the City and result in a potential $4.5M in annual revenue. Council discussion ensued regarding a sales tax increase ballot measure, concerns, and other available options. In response to questions posed by the Council, City Manager Gonzalez stated the UUT Modernization could potentially increase utility taxes by $300 annually, per household. Director of Finance Johnson added that Staff would return to Council on May 6, 2019 with a strategy to educate the community on the current financial situation; the Council would not have to make a decision to place an item on the ballot until later this year. The Council directed Staff to return on May 6, 2019 with further information regarding the Sales Tax Override and the UUT Modernization. CITY COUNCIL PRIORITIES FOR FISCAL YEAR 2019-2020 City Manager Gonzalez stated that he developed goals for Economic Development, City Image, Financial Sustainability, Environment, Infrastructure, and Public Services. Discussion ensued regarding concerns and whether to continue the Item to a Special Meeting on May 28 in order to allow for Mayor Pro-Tem Alvarez to be present. Moved by Councilmember Gonzales, seconded by Councilmember Carrillo, and carried by the following vote of the Council to continue the item to a Special Meeting on May 28, 2019. AYES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA NOES: COUNCILMEMBERS: ALVAREZ ADJOURNMENT The meeting was adjourned by consensus of the City Council. TIME OF ADJOURNMENT: 7:46 P.M. __________________________________________ CITY CLERK PAGE TWO –4/22/2019